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Bloopers And Blunders While Agreeing On A Mortgage

While opting for a mortgage loan to handle one's current financial situation, a lot of people rush to the first company they come across. At times this might work out well. But at other times one needs to do more ground work before taking the decision. Where money is involved, time is of the essence and other factors such as reliability and credibility need to be assessed. Understanding the whole loan process and the paper work involved can become a little too much. But this must be done to protect oneself from getting into incomplete agreements. This is especially true if the person who is selling you the mortgage is trying to sell at all costs and ends up making some unwarranted commitments. An over-enthusiastic sales person will often make the mistake of over committing. Make sure that all the commitments you receive are in writing.

After taking a mortgage, some buyers are in a fix as they do not know how to get out of the mess they are in. Understanding">All this is because of lack of preparation and awareness. In fact, sometimes I come across mortgage buyers who seem so naive that you wonder where these "babes in the woods" came from. Naivete might be cute, but it is certainly not smart. Some of the other common mistakes made by mortgage buyers are:

1. Planning ahead -- Most buyers do not plan for the future. They look at loans as an option for ending their current dilemma. If one wishes to invest in real estate, they need to think about what the house will fetch if sold and if they will be able to sell it. All this must be discussed with a banker or a real estate agent before signing on the mortgage agreement.

2. Written documents -- In the process of approving the mortgage, many buyers overlook the aspect of getting a written document. If they are not in possession of the contract, the companies may cheat them or they will lose out on certain benefits that were discussed during the meetings. Especially if you won some negotiation points, make sure that these negotiation points are mentioned in the agreement before you sign it.

3. Borrowing Limits - Buyers assume they will be eligible for any amount of loan from the mortgage company which is not true. And even if they offer you the same, you will end up paying high rate of interest. This will only add to your financial woes. You will have to work towards repaying your debts as well as struggle to meet your interest payments, so one need to think it through before agreeing to the same.

4. Extra costs planning -- When closing the mortgage deal, buyers have to make some additional payments such as legal fees and taxes. Redemption penalty might also be charged if the loan is cleared before the stipulated time. In order to brace oneself for this unexpected expenditure, it is better to get an estimate while talking to the mortgage company before taking the loan.

Submitted by:

Ajeet Khurana

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